Burned investors wary; financial planners step up - Pressure on Investment Advisors after fraud

Thanks to the Wall Street meltdown and the Bernie Madoff scandal, everyday investors are associating financial advice with "Ponzi scheme" more often than anyone in the industry wants to see.
All the troubling news shows that Burned investors wary; financial planners step up
By Susan Tompor - Detroit Free Press

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Thanks to the Wall Street meltdown and the Bernie Madoff scandal, everyday investors are associating financial advice with "Ponzi scheme" more often than anyone in the industry wants to see.
All the troubling news shows that investors must question how their money is being invested, according to Marilyn Capelli Dimitroff, a certified financial planner who's president of Capelli Financial Services Inc. in Bloomfield Hills, Mich.

Dimitroff, who has been a certified financial planner since 1982, is now the chairwoman of the board of directors for the Certified Financial Planner Board of Standards Inc. There are about 59,000 certified financial planners nationwide.
In her new role in the national spotlight, she'd like to spread more clarity regarding financial services and encourage investors not to give up during the roughest patch many have ever run across.
"To be a good investor, you have to have a long-term focus," said Dimitroff, who has regularly been identified by Worth magazine as one of the country's top wealth advisers.
"You need to have a backup because life is unpredictable."
She recommends: Keep at least six months of money to cover bills in an emergency fund - not invested in stocks. If retired, aim to have two years of money in an emergency fund so you don't need to sell stocks after a downturn to cover living expenses.
She expects Congress to rush to pass some new securities regulation in the wake of the turmoil and says certified financial planners want to make sure their voices are heard when it comes to revamping the rules. They want to make sure that consumers can identify qualified advisers but that advisers aren't overburdened with regulations.
The CFP Board, the Financial Planning Association and the National Association for Personal Financial Advisors are working together as Congress undertakes regulatory reforms and revisions.
Objectives include ensuring that financial planning services are delivered to the public with fiduciary accountability and transparency, serving the client's best interests.
Dimitroff has also worked on revising the code of ethics for the national board, which requires a fiduciary level of care when providing financial planning services. They are required to provide clients with information about the planner's source of compensation and conflicts of interest in writing.
She said one of the biggest problems facing investors is confusion. It's hard to know a professional's qualifications.
For years, regulators have complained that some of the alphabet soup of designations is nothing more than phony comfort food. Some scam artists even are using fancy titles as a cover to push bad investment products or advice.
Dimitroff said one of her goals as board chairwoman is to help investors understand the education and training involved in becoming a certified planner.
As for red flags, Dimitroff said investors should make sure that they never write a check for an investment to the name of a salesperson. It should go to an independent custodian.
Some scam artists have claimed to be certified financial planners to gain a client's trust but then did not have such certification.
Never expect double-digit returns, year after year.
"I'm a firm believer: If it sounds too good to be true, it is," Dimitroff said.
If you have no idea what to do with a 401(k), she said: Make sure you have a mix of stocks and bonds. A starting point is a 50-50 mix. Choose a greater amount of stocks if you're younger or can stomach more swings in the market.
Don't throw all your money into bonds now, she warned, just because the stock market is jittery. Bonds can lose value when interest rates shoot up.
Dimitroff, a certified financial planner who's president of Capelli Financial Services Inc. in Bloomfield Hills, Mich.

Dimitroff, who has been a certified financial planner since 1982, is now the chairwoman of the board of directors for the Certified Financial Planner Board of Standards Inc. There are about 59,000 certified financial planners nationwide.
In her new role in the national spotlight, she'd like to spread more clarity regarding financial services and encourage investors not to give up during the roughest patch many have ever run across.
"To be a good investor, you have to have a long-term focus," said Dimitroff, who has regularly been identified by Worth magazine as one of the country's top wealth advisers.
"You need to have a backup because life is unpredictable."
She recommends: Keep at least six months of money to cover bills in an emergency fund - not invested in stocks. If retired, aim to have two years of money in an emergency fund so you don't need to sell stocks after a downturn to cover living expenses.
She expects Congress to rush to pass some new securities regulation in the wake of the turmoil and says certified financial planners want to make sure their voices are heard when it comes to revamping the rules. They want to make sure that consumers can identify qualified advisers but that advisers aren't overburdened with regulations.
The CFP Board, the Financial Planning Association and the National Association for Personal Financial Advisors are working together as Congress undertakes regulatory reforms and revisions.
Objectives include ensuring that financial planning services are delivered to the public with fiduciary accountability and transparency, serving the client's best interests.
Dimitroff has also worked on revising the code of ethics for the national board, which requires a fiduciary level of care when providing financial planning services. They are required to provide clients with information about the planner's source of compensation and conflicts of interest in writing.
She said one of the biggest problems facing investors is confusion. It's hard to know a professional's qualifications.
For years, regulators have complained that some of the alphabet soup of designations is nothing more than phony comfort food. Some scam artists even are using fancy titles as a cover to push bad investment products or advice.
Dimitroff said one of her goals as board chairwoman is to help investors understand the education and training involved in becoming a certified planner.
As for red flags, Dimitroff said investors should make sure that they never write a check for an investment to the name of a salesperson. It should go to an independent custodian.
Some scam artists have claimed to be certified financial planners to gain a client's trust but then did not have such certification.
Never expect double-digit returns, year after year.
"I'm a firm believer: If it sounds too good to be true, it is," Dimitroff said.
If you have no idea what to do with a 401(k), she said: Make sure you have a mix of stocks and bonds. A starting point is a 50-50 mix. Choose a greater amount of stocks if you're younger or can stomach more swings in the market.
Don't throw all your money into bonds now, she warned, just because the stock market is jittery. Bonds can lose value when interest rates shoot up.